Country Case Studies and Links

Spain

by Dan Galluppi

Spain's current welfare system is a recent creation, especially when compared to other European countries. Most of the changes in the welfare state occurred in the mid 1970s, following the end of the dictatorship of General Franco, in 1975. Traditionally, the Catholic Church had great influence over Spanish welfare policies, which were designed to support patriarchal family structures and the authoritarian state.

During the Franco period, Spain had established a despotic-corporatist welfare regime. The Franco government had repealed family policy reforms undertaken by the popular front government in the 1930s. This was done in an attempt to strengthen the traditional family. Support of patriarchy led to financial aid for married couples, benefits for wives who did not work outside the home, maternity benefits, child benefits, and birth awards to reward large families. The focus on child benefits and family salary reinforced the idea that married women were subordinate to men and the woman's place was in the home. In addition to these benefits, there was also family tax relief. In 1973, the recession led to cutbacks in family benefits. The Franoist regime, however, was strongly patriarchal, and in favor of family values. As a result of these beliefs, maternity and single parent benefits are, even today, among the lowest in the European Union.

After the fall of the dictatorship, the Socialist party (PSOE) came to power in the early 1980s and remained in power for over a decade. The Socialist party programs signaled a dramatic departure from the welfare state of the past, and formed the blueprint for Spain's current welfare state model. Like other late developers in the European Union, Spain's welfare system is still changing. It mixes the so called "Bismarck" and "Beveridge models", but still lags behind Northern European nations in terms of scope and benefit levels.

Since the 1980s, when the PSOE came to power, the welfare system has consisted mainly of cash benefits, and covered areas such as health care, social housing, and education. However, there have been few social care services. Moreover, the state has provided earnings-related contributory benefits for retirement, disability, sickness, and widowhood. Insurance-based unemployment benefits have been available to some, but entitlements have depended on the length of contributions. Insurance schemes have been all organized through the central government, not state or local governments. Pensions have been financed through employers' and employees' contributions, and less through direct taxes. Different groups of workers receive different levels of benefits. While a general insurance regime cover most industrial and service sector workers, other schemes cover twenty other categories including agricultural workers, the armed forces, and civil servants. As such, insurance rights reflect occupational status, as is typical of the Bismarck model. In the past, over 90% of the contributions nationwide came from the general regime, which, however, was intended to cover only two-thirds of social security recipients. This meant the workers contributing to the general regime were in fact subsidizing the welfare benefits of the more affluent groups affiliated with the special regimes.

Public expenditures for contributory pensions and unemployment benefits grew rapidly in the 1980s. In 1984, the new Socialist government created a noncontributory assistance scheme for disabled people and other groups least likely to fulfill contribution conditions for insurance, such as women, young people, and long-term unemployed people. Pensions were universalized with a new category of means-tested noncontributory benefits.

Health care has been provided through four systems: social insurance, private, occupational, and charitable. The charitable provision was locally administered, of questionable quality and stigmatic. The social insurance provided for hospital care, good medical services and subsidized prescriptions. Most social insurance hospital care was supplied by private hospitals, and to a large extent, by institutions run by the Catholic Church. Special regimes for civil servants or armed forces operated along side the general regime creating a mixed and uncoordinated health system with overlapping functions. The quality of services also varied across regions. A National Ministry of Health was created, whose goal, until 1982, was to move towards a comprehensive reform of the whole system. In 1986 the government established a universal National Health Service to guarantee all Spaniards and foreigners in Spain a right to health care.

Social care for the elderly has been limited. About nine out of ten Spaniards of retirement age live with the family. There is still a large portion of elderly that live alone on low income. Many times, widows, in rural areas have no family support due to the migration of population towards urban areas. Only 5% of Spain's elderly live in retirement homes. Community health care development was piecemeal, as different communities passed their own legislation at different times. Home care services were almost nonexistent, so care rested on families and residential institutions.

Housing during Francoism was based on home ownership through mortgage subsidies. There was some social housing. These policies did not have a redistributive effect. Rents were frozen after Francoism fell which prevented an active housing market. The cost of housing is on the rise due to property speculation. Problems with housing have caused delays in marriages of young people, and reinforced the idea of extended family living together.

In the past, the education system, reflected considerable inequalities. About half of all non-university students registered at private centers, but these centers were financed through public funds. This inequality is evident by the fact that students coming from working-class families make up only about 25% of 19 year old university students, but over half of the total population in that age group. Basic education at primary and secondary levels was made universal.

The Spanish economy suffered considerably during the recession of the 1970s. After described as state protected corporatism, it favored the defense of national interest groups against the competition from external business. Moreover, Spain was dependent on the import of foreign raw materials, energy and food products, pushing up the inflation rate to 25%, then the highest in Europe. In 1982, the Socialist party came to power. It abandoned its previous platform of nationalization and massive public spending in favor of a new program with four basic objectives: to reduce inflation, improve profitability, make the economic system more flexible and liberal, as well as restructure the industry to adapt to the recession. These new policies caused the devaluation of the currency, but labor costs also declined to levels of 43% below the industrialized country average by 1985. This led to a quick recovery, improved the export situation, and eventually caused inflation rates to fall. This also led to an increase in unemployment. When Spain entered the EU, foreign capital infusions increased. Unemployment fell, as the new money created more jobs. By 1989, these increases peaked and began to fall again.

At the end of 1991, the Spanish population was estimated to be just under 39 million, indicating a growth rate of only 0.2% since 1981. Fertility rates fell below the level to ensure generational replacement. The decline in fertility continued until 1992, and by this time it had become the lowest in Europe. This, in combination with falling mortality rates, and a lack of immigration led to a quick rise in average age. By 2020, the share of the population over 65 years is projected to be at 18.3%. Women are marrying and having children later, and marriage rates overall are falling as a result of unemployment. The portion of unwed mothers in Spain is still low, but increasing. Divorce rates, which were traditionally low, are now rising, as are the cases of single parent families. Between 1981 and 1990 the number of people seeking work rose from 13 to 15 million. During that time, unemployment shot up to almost 22%, but subsequently dropped to 16%, however, the female unemployment rate remained stable at about 25%, with more than a third of the jobless stuck in temporary jobs. This situation causes great division between groups of workers in terms of earnings, working conditions, and social security rights. Unemployment benefits were increased, but are still inadequate.

Public opinion supported increases in spending on social welfare services. Recently however, the willingness of people to pay higher taxes for expanded services has declined. Almost half of the population believes social security is too costly. Moreover, the Socialist government directed resources towards the restructuring of industry, neglecting improvements of social services. Pressure from trade unions accompanied with economic prosperity led the government to favor social spending.

Future concerns of the Spanish Welfare state are likely to include problems associated with unemployment, the increasing flexibility of labor markets, and an aging population. These problems have largely prevented greater social equality despite increased public expenditure. The number of people living in poverty is still substantially higher than other parts of Europe. Despite the enormous changes in the Spanish welfare state since the end of the Franco regime, remnants of the old welfare system still survived. It remains to be seen how the emerging Spanish model will deal with demographic and economic changes in the years to come.

Sources:

Spain: Growth to Diversity. By Elisabet Almeda amd Sebastia Sarasa in Vic George and Peter Taylor-Gooby (1996). European Welfare Policy; Squaring the Welfare Circle St.Martin's: New York